Copper Advances on Supply Shortage Forecast; Lead Gains to Three-Year High

Copper rallied on expectation demand will outstrip supply, while lead gained to near the highest price in almost three years on speculation rebuilding from the Japanese earthquake disaster will spur consumption.

Three-month copper on the London Metal Exchange rose as much as 1 percent to $9,424 a metric ton and was at $9,409 at 2:45 p.m. Tokyo time. The metal for May delivery in New York gained 0.6 percent to $4.28 a pound. Markets in China are closed today for a public holiday.

“Copper was still trading in a recent range amid an absence of Chinese traders, while forecasts for a supply deficit this year are lending support to prices,” said Hwang Il Doo, a senior trader at Korea Exchange Bank Futures Co. in Seoul. “Lead is benefiting from Japan’s disaster,” he said.

Anglo American Plc (AAL) said it will struggle to meet its 2011 production target at the Collahuasi copper mine in Chile, the world’s third-largest, after heavy rains reduced output in the first two months of the year. Production at the mine, which London-based Anglo operates with Xstrata Plc, was “well below target” in January and February, the company said.

Teck Resources Ltd.’s Quebrada Blanca copper mine was also affected by the rains, company spokeswoman Claudia Onetto said yesterday.

Lead for three-month delivery advanced 0.9 percent to $2,776 a ton, the highest price since April 28, 2008. LME lead stockpiles have slid 5.5 percent since Feb. 15, when stocks were at the highest level since 1995.

Mitsubishi Materials Corp. said yesterday it will boost lead output by 16 percent in the April-September period to meet increasing demand for batteries after the Japanese quake. Usage will outstrip supply by 20,000 tons in 2011 after a surplus of 35,000 tons last year, according to Neil Hawkes, an analyst at London-based researcher CRU International Ltd.

Aluminum in London rose 0.4 percent to $2,644 a ton, while zinc climbed 0.7 percent to $2,434 a ton. Nickel added 0.4 percent to $25,595 a ton, while tin hadn’t traded as of 2:50 p.m. Tokyo time.